How do I obtain an IRS settlement?
First off, why would you need an IRS settlement? If you haven’t paid a portion or all of your taxes, the IRS will initiate their collection process and seek your back-taxes payment. The IRS offers an installment agreement in which you may pay off your IRS debt (and the interest it accrues) over the course of about five years. Before seeking a settlement avenue, you must file your taxes first or, if the IRS completed a substitute return for you in your absence, submit an amended return to fix any inaccurate information.
While it’s significantly more difficult, it may be possible to actually settle your IRS tax debt for less than what you owe. Some reasons that constitute the need of an IRS are financial struggling and valid explanations of what happened and why you should not be penalized. If you happen to owe the IRS $10,000 or more in back taxes, you may settle for less through a Partial Payment Installment Plan, in which appropriate payments are assigned based off of a Collection Information Statement (including your income, total assets and liabilities). In addition to this, you must fill out Form 9465 and use any major assets you may have to settle a portion of your debt before approval for a Partial Payment Installment Plan. This method can be considered settling for less if your Collection Information Statement is completed correctly, then used efficiently to calculate a reasonable monthly payment. A seasoned tax lawyer has the ability to save you the most money possible by understanding the intricacies and assessing your personal situation.
You may also look into another IRS settlement strategy, the Offer in Compromise. This method is incredibly difficult to get, as it requires you convincing the IRS that they would be exhausting more money and resources attempting to collect than if not. You may either prove to the IRS that the total amount owed is incorrect, that the chance of the full amount being paid in full is low, or that extreme financial hardship will come from paying the back taxes.
Another option is to have the IRS abate your penalties. While this does't actually lower the original amount owed, it does shave off significant penalties and interest accrued over the delinquent period. Extra fees alone can account for 15%-25% of the entire balance, and the IRS is far more likely to approve abatement over the previous two methods of IRS settlement.
When you owe back taxes to the IRS, there still remains the possibility that you won’t qualify for any IRS settlement plan on your own. A qualified tax attorney understands all of the methods of recourse involved for settling tax issues and has the expertise to evaluate your situation properly.